Annie Bourque | Journalist
Not many people understand what foreign exchange brokers do. Their job is to make it easier to understand the risks associated with exchanging foreign currency, providing advice and strategies to help ambitious entrepreneurs in import/export.
Desjardins foreign exchange broker Steve Sanche says international factors like the financial crisis, climbing debt and free markets have changed his profession a lot in the last 20 years.
Free-trade agreements between countries have created incredible business opportunities. “Small, medium and large businesses are looking beyond their own borders to increase their opportunities and their client pools,” says Sanche.
Here are 5 factors that make a foreign exchange broker a real asset for international business.
1) A relationship you can trust
Every day, Sanche builds trusting business relationships with clients travelling for business in the U.S. and around the globe. Every business follows a different path, and a foreign exchange specialist needs to be able to adapt to the needs of each. “Providing sound advice is important because most businesses don’t have much financial flexibility.”
2) Risk evaluation
Foreign exchange brokers try to understand the issues that business leaders have to deal with. “We evaluate their risk appetite.”
Sanche gives the example of meeting with a Christmas tree exporter that sells 100% of his production in the U.S. “His risk exposure would be different from a client who only does 30% of their sales down there.”
3) Playing roles
An entrepreneur might try to make money selling bolts or closet doors in the U.S. “I advise them on their foreign exchange risk. Their expenses are in Canadian dollars and their revenue is in American dollars. My role is to neutralize the risk so they can focus on business,” says Sanche.
Foreign exchange brokers tell their clients how important it is to have a good hedging strategy that will offset the negative effects of fluctuating exchange rates. Sanche and his co-workers offer solutions that protect businesses, ultimately saving them from taking financial losses. “In other words, by putting off risk we act as a bit of an insurance policy,” he explains.
5) A reliable source
Many business leaders don’t know much about foreign exchange rates. A foreign exchange broker stays informed and is someone you can count on.
“The market was stable for a long time. But today, business owners are dealing with a lot more volatility. Three years ago the U.S. dollar was worth C$1.08. Today, it’s at around C$1.30. With that type of unpredictability, I advise my clients to set a reasonable rate in their budgets and to try and beat it,” says Sanche.